Elevate Campuses ₹750 Crore IPO Proceeds To Cut Debt, Leverage Could Near 4x By March 2027, Says Management

Student accommodation operator Elevate Campuses is set to open its ₹2,100 crore initial public offering (IPO) on September 23, with the issue priced at ₹343-362 per share. The Hillhouse-backed company plans to use ₹750 crore of the IPO proceeds to repay debt, a move management expects to significantly reduce leverage and bring its debt-to-EBITDA ratio closer to 4 times by March 2027.

The company currently has debt of around ₹3,400 crore. Board director Mukesh Tiwari said the repayment of ₹750 crore from the company's IPO proceeds would bring outstanding debt down to approximately ₹2,600-2,700 crore.

That would take the company's historical debt-to-EBITDA ratio from around 6-7 times to roughly five times. The ratio could decline further towards four times as EBITDA increases through March 2027, Tiwari said.

For Elevate Campuses, the reduction in borrowings is expected to have a direct impact on financing costs. CEO Narasimha Jayakumar said the company has seen its margins expand for three consecutive years and currently operates with margins of around 19-20%.

"We would like to maintain the same trajectory going forward," Jayakumar said.

The company expects the reduction in interest costs following the debt repayment to support further margin expansion. This gives the IPO proceeds a balance-sheet role beyond funding growth, with a portion of the fresh capital being used to reduce existing financial obligations.

Elevate Campuses' operating profile is built around education-related infrastructure rather than conventional commercial real estate. The company owns and manages student accommodation for universities, while also owning K-12 school assets that are leased to third-party operators.

Its accommodation business includes facilities for institutions such as Manipal and OP Jindal. The company also runs a managed-beds operation, where it provides accommodation services directly to universities.

"This is a very operations-intensive business, not just real estate," Jayakumar said, referring to the services offered alongside student housing, including cafeterias, laundry facilities and gyms.

The business generated revenue of around ₹807 crore in the latest year. Student accommodation accounted for about 55% of EBITDA, while the K-12 segment contributed the remaining 45%.

Elevate Campuses has also been growing operating earnings faster than revenue. Revenue has increased at a compound annual rate of around 20% in recent years, compared with approximately 26% growth in EBITDA. The company's blended EBITDA margin is around 78%.

The company believes the nature of its assets also provides visibility on cash flows, which has helped it access longer-duration financing. Tiwari said debt raised against its assets typically carries a tenure of 15-20 years.

"These are long-duration assets with predictable cash flows," Tiwari said, explaining the company's ability to secure longer-term borrowing.

Tiwari added that lenders have historically been willing to provide financing equivalent to around 7-8 times EBITDA at the individual asset level.

Elevate Campuses is raising ₹2,100 crore through its IPO, with ₹750 crore earmarked for debt repayment. The issue has a price band of ₹343-362 per share and will open for subscription on September 23.

With the planned debt repayment and expected growth in EBITDA, Elevate Campuses is looking to strengthen its balance sheet while continuing to expand its education infrastructure portfolio. The company’s upcoming Elevate Campuses IPO will open for subscription on September 23, giving investors an opportunity to participate in its next phase of expansion.

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